Businesses have a large impact on the nourishment of countries and their people. In order for businesses to be successful in their operations, it is important for them to take into account all of their stakeholders – not only as consumers but also as contributors to the business. Thus, inclusive growth – which stems from the belief that there is a direct correlation between business success and the social, environmental and economic prosperity of all communities and countries – plays a very crucial role in business accomplishments.
In line with this, ethical business, social responsibility, and sustainable development are a few more of the intertwined concepts that have been making rounds of the international business sector. The recognition of the importance of inclusive growth in India has led to a larger amount of resources being invested in it. In addition, encouragement from the government in the form of the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (Ministry of Corporate Affairs, Government of India) is also testament to the importance of inclusive growth in India.
The actual impact created by this increasing investment from business and the government is greatly dependent on two factors: the effectiveness with which inclusive growth activities are carried out, and the stakeholder accountability demonstrated through this process. These dependencies in turn are determined by the levels of transparency maintained and the quality of systems and procedures in place to carry out inclusive growth initiatives.
Worldwide, there are numerous principles, guidelines, standards, certifications, and reporting frameworks which have been designed in order to meet these very needs of increasing transparency and improving the quality of systems and processes of an organization’s sustainability initiatives. Examples are SA 8000, AA1000, ISO 26000, Global Reporting Initiative, etc. The SA 8000 is an auditable certification standard based on international workplace norms. The AA1000 are principles standards which provide a set of principles to frame and structure the way in which organizations understand, govern, administer, implement, evaluate and communicate their accountability. The ISO 26000 is a set of management and leadership guidelines for social responsibility. The Global Reporting Initiative is the world’s leading sustainability reporting mechanism. India’s National Voluntary Guidelines apart from providing guidelines on social, environmental and economic responsibilities of businesses, also provides a reporting framework template for organizations who do not already prepare sustainability reports.
Bearing the above frameworks in mind, it is crucial to remember that inclusive growth involves the collaboration of various stakeholders. This highlights the need to build trust amongst one another in order to truly move forward in the direction of inclusive growth. Building of trust implies that stakeholders must be assured that what a business states is actually what it undertakes. This is where assurance mechanisms and verification of sustainability reporting through third party verifications comes into play.
It is interesting to note that over the past three years (2009, 2010 and 2011), 23, 25 and 18 businesses respectively have reported on their activities using the GRI framework . Sustainability reporting through other mechanisms too has been on the lower scale.
Countries like the United States of America, Spain, and Brazil, are forerunners as far as reporting through GRI is concerned with 127, 117, and 75 reports being submitted in 2011 respectively. For India to retain its competitive advantage and keep pace with the sustainability direction the world is taking, the country needs to pay heed to the fervency with which it implements sustainability reporting and assurance.